Our perspective at VantagePoint

Slow Down, Netflix!

Like millions of others out there, I got a rather long-winded email from Netflix CEO Reed Hastings this week. Frankly, the content of the email left me a bit boggled. He was apologizing (but not taking corrective action) and explaining why I should be happy to pay more to get less through a soon-to-be much more inconvenient system.

What customer wouldn’t relish getting such a communication?

Of course, this comes as no surprise since so many of Netflix’s recent decisions, including raising prices by 50 percent without any real explanation or communication, have left me both annoyed as a consumer and confused as a communicator.

So, what advice would I, as a PR professional, offer the company? It can be summed up quite simply: SLOW DOWN, NETFLIX!!!!

I suspect that the initial decision to raise prices came as a response to pressure from Wall Street, and the company simply decided to forge ahead with an almost immediate increase. I would argue that these types of decisions should be made very carefully over time and in light of research into what the market will bear and likely backlash. If a company decides to move ahead, dramatic price increases are best explained and justified to customers, rather than simply announced. Also, customers should be given some advance notice that increases are coming. In its rush to meet financial objectives, it appears Netflix missed these key steps.

One would assume that they would have learned their lesson, but this most recent communication makes me think not. Here’s why: There has been no communication from the company since July, when they first announced the increase. Now, almost three months later, and under mounting public pressure, they finally say SOMETHING and take action, but what was said and done seems ill-conceived and knee-jerk.

Before the e-mail was sent, perhaps someone from the company should have taken a step back to consider how things look to the people they are theoretically trying to pacify and make some key brand decisions in light of this.

1) The name change. Diluting your brand, especially one that had once enjoyed such equity, is almost never a good idea. Changing names in the midst of a crisis smacks of subterfuge and is simply a bad idea.

2) The so-called apology. Typically, a corporate apology includes a “mea culpa” and a corrective action. Aside from a “We’re sorry if you were offended,” and a self-serving explanation of the CEO’s fears and pressures, this offered neither.

3) The course of action. At this point, Netflix has rubbed salt in an open wound by telling us that not only would we pay more for service we already enjoyed, but, rather than improving anything, we would now have to manage two separate queues on two different sites, in effect doubling the amount of time it takes us to use the service.

4) The branding. It goes without saying that choosing a name for the new service that is both outdated and in use on Twitter in a rather unsavory form is a huge mistake. It is inconceivable to me that it appears no research was done to support something as big as a name change.

5) The do-over. The fact is, you can’t reverse the damage done by a failure to communicate in a timely manner with a hastily prepared email. If they were serious about rectifying things, something would have been done much sooner.

While no company ever wants to be the bad example used in a marketing or business school case study, I fear that Netflix has become just that. I hope that those reading this will use Netflix’s experience as a cautionary tale on the importance of carefully considering one’s words and actions before making any moves. Focus groups, research, open dialog and preparation go a long way in determining the success of major business decisions.

JoAnne Abed

Comments

In yet another sudden and stunning move, Netflix announced today that it has abandoned its plans for Qwikster. I would add the notion that there really are no do-overs in PR to my initial advice to slow down. What a mess! Read more about the company’s decision here: http://www.prdaily.com/Main/Articles/9727.aspx.